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Bond market essential to facilitate long-term finance, curb default loans

Experts tell FBCCI seminar


Published : 11 Oct 2022 08:54 PM

If the bond market in the country gets popular, dependence on banks for loans will decrease. It will also minimize the risk of Non-Performing Loan-one the biggest challenges in the banking sector. Moreover, the Bond Market will appear as an alternative sustainable source of long-term finance for industrialists.

FBCCI President Md. Jashim Uddin made these remarks at the seminar titled “Bond Market: The Ultimate Solution for Long term Financing” held at FBCCI on Tuesday morning.

In his welcome speech, FBCCI Chief said, the Country lacks long term financing institutions. Taking the short-term deposit, it’s tough for banks to disburse loans for long term, which often pushes entrepreneurs to be unwilful defaulter as they have to pay instalments before they receive any returns form investment. Therefore, Bond Market can be an effective solution for long term financing.

While speaking as the Chief Guest at the seminar, Private Industry and Investment Adviser to the Prime Minister Salman F Rahman MP said that, Stock market in Bangladesh was only composed of equity transactions. However, the bond market is an integral part of a country’s capital market to be a vibrant one. Recognizing this need, the Government has taken initiative to introduce bonds in the capital market, the Advisor added.

Speaking as the Special Guest, Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor Shibli Rubayat-Ul-Islam informed that Perpetual Bond has already been introduced in stock market.

When other bonds become available, the bond market will be more popular. The BSEC Chairman informed, IFC expressed its keenness to introduce a bond of $4 bn in Bangladesh.

BSEC plans to launch orange bonds for women entrepreneurs, pink for small and micro entrepreneurs, a startup board for financing new entrepreneurs, Professor Shibli Rubaiyat-ul-Islam further informed.

Vice Chairman of Shanta Asset Management Limited Arif Khan CFA, FCMA delivered the keynote at the seminar.

 He informed that, the country’s bond market GDP ratio is only 8%, which is much less than many others countries Complex and time-consuming procedures, fluctuation in bank interest rates, excessive regulations on trustee registration are marked as obstacles in the Bond Market. Informing that, the minimum bond transaction size in the capital market is Tk 1 lakh and the transaction fee is tk 1 thousand, Keynote speaker urged to reduce the lot size.

President of DSE Brokers Association of Bangladesh Richard de Rozario said that investors' interest must be ensured in the bond transaction.

FBCCI Director and Chairman of Stock Market and Bond related standing committee Amzad Hussain said, only 10% of the most bonds which were recently issued are kept for public trade, the rest 90% are preserved for private placement, which are non-tradable. 

Among others, FBCCI Vice President Md. Amin Helaly, Md. Habib Ullah Dawn, M A Razzak Khan Raj and Directors were present.

Secretary General Mohammad Mahfuzul Hoque moderated the seminar.